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2 weeks ago
Author: Bullishcharts

Alphabet Searches For Some Investor Love | $GOOGL

Commentary has been quite negative post earnings release from Alphabet Inc (NASDAQ: GOOGL). As a result, we’ve already seen the company’s stock drop as much as 5%. This, however, should be kept in perspective. Personally, we are avoiding the noise from sell side analysts; with an agenda to see the stock drop.

From a fundamental perspective, GOOGL’s earnings were a beat, as Alphabet reported fourth-quarter earnings of $15.35 per share on revenue of $46.075 billion. Analysts were expecting the company to report higher earnings of $12.53 per share on revenue of $46.94 billion. Revenue was a disappointment, nonetheless it must be remembered that there is still a $21 billion buyback program to complete. In addition, there is fantastic growth in Google Cloud; which says that revenue could quickly jump from $1.7 billion to $2.6 billion.

“I’m really pleased with our continued progress in Search and in building two of our newer growth areas — YouTube, already at $15 billion in annual ad revenue, and Cloud, which is now on a $10 billion revenue run rate,” CEO, Sundar Pichai said.

Let’s Have a Look at the Daily Chart for Some Perspective and Foresight; As to Where $GOOGL may be Heading in the Days To Come:

Googl Chart 1

When we have a close look at the daily chart, we can clearly see that GOOGL hit quite strong Fibonacci expansion and extension resistance at $1493.79; which held for 3 sessions as resistance.

Given the strong move in the stock in 2020, GOOGL has no support from the major moving averages until the $1380 level comes into play. There is, by no means, any certainty that the stock will drop that low in the days to come. The market could very well continue to drag the company higher.

Horizontal weekly support is them the next level to consider at $1333 with the Daily support also acting as breakout support at $1296.

During Last Friday’s horrid session, in which the Dow Jones Industrial Average (^DJI) dropped 600 points, GOOGL‘s $1428 price-level acted as support. This was once again tested today; so our focus should be on that support for the coming sessions ahead.

$GOOGL’s Technical Indicators must also be Investigated for Some Hints as to Where Support can be Found in the Market, so Let’s Consult the Daily Indicators for Some Hindsight or Indeed Foresight.

Googl Chart 2

Indicators Provide Us With Some Direction on a $GOOGL Trade:

  • RSI is in a strong long-term uptrend, but a pullback to the 40 level is very possible – to test old support from Oct 2019.
  • Stochastic had reset and crossed bullishly pre-earnings, which looks set to change with a much deeper reset on the cards.
  • Histogram and the MACD was already telling a negative story: signalling a change of trend.
  • Momentum looks set to cross bearishly under trend line – and below the ZERO level is a short signal.
  • We expect the OBV to pullback and test the old breakout level.

The Summary of this $GOOGL Story.

To summarize, the indicators shown above were already signalling a correction was due for GOOGL; as we had higher prices but lower levels on indicators. These bearish divergences are not always a predictor of what will happen, but should be considered when considering buying or selling any stock.  These indicators are used in algorithmic trading, as well as by investors and traderrs who purely rely on technical, rather than fundamental strategies.

If you are without a position in GOOGL, it is advisable to let the dust settle for a few days; as a slight pullback would be healthy for the stock, to entice some new money, unwillingly to enter at elevated and overbought levels. Investors and traders, who gambled on an earnings move, may exit fast – which could compound the selling in the early hours today.  All and all, it is difficult to see any reason for the major holders, the institutional investors; to dump the stock with such growth, revenue and a considerable buyback as a safety net.

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